29 January 2002 External T.I. 2001-0113105 - SOCIAL ASSISTANCE PAYMENTS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Are certain payments received for providing care for a severely handicap child subject to tax?

Position: Insufficient information and completed or ongoing transaction.

Reasons: General information concerning the possible application of paragraph 81(1)(h) of the Act.

XXXXXXXXXX 	2001-011310
		Jacques E. Grisé
January 29, 2002

Dear XXXXXXXXXX:

Re: Care of Special Needs Children

This is in reply to your letter received on November 30, 2001, requesting a ruling with respect to amounts you have received for the care of a severely handicapped child and information on the Canada Child Tax Benefit for the child.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R4, Advance Income Tax Rulings, dated January 29, 2001. Where the particular transactions are completed, as in your situation, the enquiry should be addressed to the relevant Tax Services Office. Also, it would be necessary to review all relevant documentation before a determination of the tax implications could be made. Therefore, we can only provide you with the following general comments.

Paragraph 81(1)(h) of the Income Tax Act (the Act) provides an exemption from inclusion in computing the income of a taxpayer in respect of certain social assistance payments received by an individual (the caregiver). A social assistance payment will not be included in the income of the caregiver for income tax purposes, if all of the following conditions are met:

1. The payment must be ordinarily made on the basis of a means, needs, or income test.

2. The payment must be made under a program provided for by federal or provincial law.

3. The payment must be received directly or indirectly by the caregiver for the benefit of the cared-for individual.

4. The cared-for individual cannot be the caregiver's spouse or related to the caregiver or the caregiver 's spouse.

5. No family allowance under the Family Allowances Act or any similar allowance provided for by provincial law can be payable in respect of the cared-for individual for the period for which the social assistance payment is made.

6. The cared-for individual must live in the caregiver's principal place of residence; or the caregiver's principal place of residence must be maintained for use as the cared-for individual's residence during the period for which the payments are made.

As indicated in item 3 above, a payment may be received indirectly by the caregiver, which could include a payment from the father of a child.

One of the requirements for receiving the Canada Child Tax Benefit in respect of a child is that the recipient must be a parent of the child. We have attached a copy of the pamphlet, Your Canada Child Tax Benefit, for additional information on this matter

We hope our comments are helpful.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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